Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Download
Standard view
Full view
of .
Look up keyword
Like this
20Activity
0 of .
Results for:
No results containing your search query
P. 1
Accounting (IAS)/Series-2-2011(Code3902)

Accounting (IAS)/Series-2-2011(Code3902)

Ratings:
(0)
|Views: 698|Likes:
Published by Hein Linn Kyaw

More info:

Published by: Hein Linn Kyaw on Jun 06, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

03/10/2013

pdf

text

original

 
 
Model Answers
Series 2 2011 (3902)
For furtherinformationcontact us:Tel. +44 (0) 8707 202909Email. enquiries@ediplc.comwww.lcci.org.uk
LCCI International Qualifications
Accounting (IAS)Level 3
 
3902/2/11/MA Page 1 of 15
 
Accounting (IAS)
Series 2 2011
How to use this booklet
Model Answers have been developed by EDI to offer additional information and guidance to Centres,teachers and candidates as they prepare for LCCI International Qualifications. The contents of thisbooklet are divided into 3 elements:(1) Questions reproduced from the printed examination paper(2) Model Answers – summary of the main points that the Chief Examiner expected tosee in the answers to each question in the examination paper,plus a fully worked example or sample answer (where applicable)(3) Helpful Hints where appropriate, additional guidance relating to individualquestions or to examination techniqueTeachers and candidates should find this booklet an invaluable teaching tool and an aid to success.EDI provides Model Answers to help candidates gain a general understanding of the standardrequired. The general standard of model answers is one that would achieve a Distinction grade. EDIaccepts that candidates may offer other answers that could be equally valid. © Education Development International plc 2011All rights reserved; no part of this publication may be reproduced, stored in a retrieval system ortransmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwisewithout prior written permission of the Publisher. The book may not be lent, resold, hired out orotherwise disposed of by way of trade in any form of binding or cover, other than that in which it ispublished, without the prior consent of the Publisher.
 
3902/2/11/MA Page 2 of 15
QUESTION 1
Trym and Frome are partners in a hairdressing business and share profits in the ratio 2:1 respectively.Apart from keeping the records, neither partner is active in the business. Their shop manager, Avon,manages the business, with help from part time staff.The business makes a profit of around $30,000 per year, after allowing for Avon’s salary of $20,000 and$15,000 paid to part time staff. The Balance Sheet of the partnership at 31 December 2010 is as follows:
$ $Tangible non current assets (book value)
4,800
Current assets
Inventory 2,000Receivables 900Bank 14,00016,90021,700
Capital $
Trym 7,900Frome 5,800
Current liabilities
Payables
 
13,7008,00021,700Trym and Frome have realised that they have become dependent upon Avon, and on 1 January 2011,make two alternative proposals to him, as follows:Proposal (1):Avon would buy the business for $130,000. All existing assets and liabilities would be taken overat their book values.Proposal (2):Avon would join the partnership on the following terms -
Avon, Trym and Frome to share profits in the ratio 7:2:1 respectively, with no partners’salaries
Avon to introduce $100,000 into the business in payment for his capital and goodwill
Non current assets to be revalued at $8,100, receivables written down to $600, withinventory and payables to remain unchanged
Goodwill to be valued at $120,000, but remain unrecorded.
REQUIRED
Prepare:(a) Avon’s Balance Sheet on 1 January 2011 assuming that Proposal (1) is accepted.(4 marks)(b) The Capital Accounts of Avon, Trym and Frome in columnar form, showing the changesas a result of Proposal (2) being accepted.(6 marks)

Activity (20)

You've already reviewed this. Edit your review.
1 thousand reads
1 hundred reads
Mandy Cheang liked this
Mala Muthusamy liked this
Mala Muthusamy liked this
Mala Muthusamy liked this
Mala Muthusamy liked this
Mala Muthusamy liked this
Edward Kam liked this
Mala Muthusamy liked this

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->